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UAE’s obstacles to attracting investment

UAE’s obstacles to attracting investment

Can you guess what they are? You can probably name a few, but we’d be mighty impressed if you listed 14. Yes, apparently there are 14.

January 12, 2011 1:43 by



The UAE is not too bad at attracting investment, generally. Sure, the last couple of years have been a problem – particularly after so many creditors got burned by government-owned companies that they had assumed were underwritten by the government. But generally, it has done okay in grabbing foreign dollars.

Now, the Abu Dhabi Department for Economic Development has released an official study identifying the main threats to capital inflows into the UAE (the amount of money coming in from abroad but spent locally). We know what you’re thinking: “I could tell them all this for free.” But could you? The study highlights no fewer than 14 obstructions to capital inflow. Want to know what they are? Well, no, of course not, but you might be interested in the main ones:

  • A steady increase in fuel prices.
  • The existing term for national partnership in most projects set up outside free zones.
  • High production and operation costs.
  • A shortage in land and other property.
  • Complicated administrative procedures for some projects.
  • Lack of skilled labour.
  • Absence of investment information.
  • The current bank credit squeeze.

“There are 14 barriers to investment flow into Abu Dhabi and the whole UAE…on top of them are the surge in the prices of petrol and other fuel, the national sponsorship terms, and lack of property and land,” says the report.

So why has the UAE done so well so far, then? “There are several factors and facts that make the potential investment climate in Abu Dhabi and the UAE in general very attractive,” says the know-it-all report. “These include the country’s strategic location, its advanced infrastructure, the presence of major international establishments in the UAE, the mushrooming of free zones, low income taxes, financial surpluses, and abundant energy resources,”



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1 Comment

  1. jasmine on January 16, 2011 3:58 am

    I am amazed that there is no mention of lack of progressive legislation. What UAE badly needs is a rigorous change to laws, a rehab of the legal system and push for alternative dispute resolution mechanisms. How can a country attract investors while hundreds (if not thousands) of them are jailed for bouncing cheques?! How can you have government related companies delay billions of dollars in dues to companies (Al Jaber aed6bm, Habtoor aed4bm, Arabtec aedxxbm) and not have a system whereby they and others get paid on time while a simple worker can go to jail for bouncing aed20,000 rent cheque? Building high rising towers and highways is easy. Building the legal framework to resolve disputes between elements of the society proves to be much more difficult and until this is addressed with vigor UAE will remain less attractive for investors.

     

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